Temporary Controls on Capital Inflows

36 Pages Posted: 14 Aug 2001 Last revised: 23 Oct 2010

See all articles by Carmen M. Reinhart

Carmen M. Reinhart

Peter G. Peterson Institute for International Economics; National Bureau of Economic Research (NBER)

R. Todd Smith

University of Alberta

Date Written: August 2001

Abstract

During the past decade a number of countries imposed capital controls that had two distinguishing features: they were asymmetric, in that they were designed principally to discourage capital inflows, and they were temporary. This paper studies formally the consequences of these policies, calibrates their potential effectiveness, and assesses their welfare implications in an environment in which the level of capital inflows can be sub-optimal. In addition, motivated by the fact that these types of controls have often been left in place after the dissipation of the shock that lead to the controls being implemented, the paper evaluates the welfare cost of procrastination in removing these types of controls.

Suggested Citation

Reinhart, Carmen M. and Smith, Richard Todd, Temporary Controls on Capital Inflows (August 2001). NBER Working Paper No. w8422. Available at SSRN: https://ssrn.com/abstract=279709

Carmen M. Reinhart (Contact Author)

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Richard Todd Smith

University of Alberta ( email )

8-14 Tory Building
Edmonton, Alberta T6G 2H4
Canada
403-492-7898 (Phone)
403-492-3300 (Fax)

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